Estate planning may sound like a boring task that only applies to the very wealthy. Not true.
Good estate planning can: protect your family from financial hardships; reduce taxes; assign responsibilities of children’s guardianship to those you trust the most; minimize the family’s emotional stress; and allow your assets to pass to your heirs quickly and with a minimum amount of hassle. A paid Estate Planner would look at the need for life insurance, consider trusts, review your wills, discuss the need for powers of attorney, as well as other planning tools.
Here is a brief explanation of a few different estate-planning tools.
Life insurance is a tax-advantaged asset that provides the family with the financial means of maintaining their standard of living after the death of a loved one. Various types of life insurance plans are available to meet the needs of many different financial obligations that are present after death. Take a look at the military specific providers of life insurance that have designed plans around the unique needs of military members.
There are a number of websites, which provide information on insurance. An excellent non-affiliated resource is the LIFE Foundation. The Life and Health Insurance Foundation for Education (LIFE) is a nonprofit organization dedicated to helping consumers make smart insurance decisions to safeguard their families’ financial futures. This is an excellent option to learn more about the different types of available life insurance plans and which type of plan would be best for you.
Trusts are vehicles that allow you to control your assets during your lifetime and have those assets distributed upon your death according to your stated wishes. Trusts can allow for a quick transfer of assets, reduce probate costs, provide privacy in distributing your estate, and possibly reduce estate taxes. An estate planner should be contacted to help you set up a trust that best meets your needs. Even with a trust, you still need a will to cover issues such as child guardianship and distribution of any property that was not placed in a trust.
A will is a legal document that, at the time of your death, allows you to distribute any property that is not within a trust. Wills also allow you to designate guardians of minor children or other legally incompetent dependents, and can create trusts to protect the interests of your beneficiaries. Your will should be reviewed periodically to ensure that it still covers all of your wishes and that changes in tax laws will not adversely affect your estate. Keep in mind that if you die without a will (called intestate), your property will not be distributed based on your wishes but rather under state law by a probate court.
Power of Attorney
A Power of Attorney allows a person of your choice to act on your behalf in handling financial matters. You can design a power of attorney to allow the other person limited or complete control over your assets. A power of attorney can be very helpful in the event you are overseas and unable to handle your financial affairs or if you become incapacitated due to illness.
An estate planner can help you design a power of attorney that can best meet your needs. Take the time to review your current estate planning documents and make sure that you have everything in place to protect your family.